The New Zealand dollar is trading near a three-week low against the greenback ahead of a local rate decision and as the economic outlook improves in the US.
The kiwi was trading at 63.19 US cents at 8am in Wellington, from 63.63 cents Friday and 63.30 cents in New York. The trade-weighted index was at 69.88 from 70.09.
• NZ dollar gains against Aussie as OCR cut expectations wane
• Westpac changes tack on NZ interest rates, sees OCR on hold
• Reserve Bank of NZ keeps OCR at 1%, scope for more stimulus
• Aussie interest rates: Reserve Bank cuts OCR to 0.75%
The US dollar firmed last week on the back of rising interest rates, and even negative comments from US President Donald Trump on the latest US-China trade talks weren't enough to stall the fifth week of straight gains by the S&P 500 Index.
The University of Michigan's consumer sentiment survey also showed a small lift, up to 95.7 from 95.5 in October.
"Optimism abounds that a trade deal will eventually be signed, in the course of time," BNZ senior markets strategist Jason Wong said in a note.
"The USD's yield advantage proved to be the swaying factor in currency markets, seeing broadly based gains, driving the NZD down further and ending at a fresh three-week low."
Talks for an interim trade deal between the US and China remain the focus of investors globally. On Friday, Trump cooled market optimism saying he hadn't yet agreed any roll-back of tariffs – a pre-condition of China's approval for any phase-1 deal.
The following day, Trump told journalists the talks are proceeding "very nicely," according to the Guardian.
China is the biggest trading partner of both New Zealand and Australia. Data there Friday showed that while its October exports and imports were down 0.9 percent and 6.4 percent respectively, they were stronger than expected, based on a Reuters poll of economists.
The main focus this week will be on the Reserve Bank's rate decision on Wednesday. Wong says market pricing indicates a 64 per cent chance of a 25 basis-point cut in the official cash rate to 0.75 per cent.
Expectations have become more mixed in recent weeks after third-quarter inflation was stronger than the RBNZ expected, commodity prices have generally improved and unemployment data last week was also better than the Reserve Bank had previously expected.
The kiwi was trading at 92.05 Australian cents from 92.46, at 49.40 British pence from 49.66, at 57.32 euro cents from 57.58, at 69 Japanese yen from 69.49, and at 4.4209 Chinese yuan from 4.4393.